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Blackberry maker brushes off iphone

On the eve of Apple's release of its much-vaunted iPhone, Research In Motion Ltd. continued to blow past expectations on the back of strong BlackBerry sales and watched its shares rocket up 16 per cent in the after-hours session in response.

By CanWest News ServiceJune 29, 2007

TORONTO - On the eve of Apple's release of its much-vaunted iPhone, Research In Motion Ltd. continued to blow past expectations on the back of strong BlackBerry sales and watched its shares rocket up 16 per cent in the after-hours session in response.

The Ontario-based company Thursday posted a first-quarter profit of $223.2 million US or $1.17 per diluted share, up 16 per cent from a year earlier.

Revenue was $1.08 billion, up 76.5 per cent from $613.1 million. RIM added another 1.2 million subscribers in the quarter for a total of nine million.

Co-chief executive Jim Balsillie attributed the significant improvement in revenue to continued strong sales and a wider selection of BlackBerry devices, such as the consumer-friendly Pearl and Curve.

"We're seeing a good mix of upgrades and new subscribers," he said during a conference call with analysts.

"The momentum we are seeing in terms of product launches, carrier support of BlackBerrys and subscriber additions is exceptional and we believe it will continue into the second half of the fiscal year."

Balsillie also brushed off concerns that RIM will face strong competition from the iPhone from here on in. Apple is launching the iPhone with only one carrier, AT&T, in one country while RIM is all over the world on dozens of providers.

"I've said before they did us a great favour because they drove attention to the converged appliance space," he said. "The attention to it has quite frankly been overwhelmingly positive for our business."

Analysts tended to agree and said it will take time for Apple to gain traction in the smart-phone business, if at all. RIM's key market -- business customers -- are unlikely to switch to iPhones because they would also have to change over to Macintosh computers to get the device's full benefits, according to Canaccord Adams analyst Peter Misek.

"Apple will sell five to 10 million but only if they get Vodafone or T-Mobile in Europe soon as it takes six months to provision for a device like this," he said.

Misek maintained his "top pick" rating on RIM shares, with a 12-month price target of $225.

RIM forecast it will add about 1.3 million BlackBerry subscribers in the second quarter, which ends Sept. 1. The company also expects second-quarter revenue will be between $1.3 billion and $1.365 billion, with earnings per share between $1.37 and $1.49, or 45 and 49 cents on a post-split basis.

Balsillie said BlackBerry devices continued to move briskly in markets outside its core North America region, with overseas subscribers now accounting for 30 per cent of the company's total. European carriers are the most aggressive in pricing plans and promotions, translating into strong subscriber growth, he said.